What is Watercraft Insurance? (Everything you Need to Know)

4,000 … That’s the number of boating accidents in the U.S. annually.

$39 million … That’s the cost of damages caused by boating accidents each year.

With those numbers, clearly protecting boat damage and injury liability is not something to be lax about. If you have a boat or watercraft, you need watercraft insurance so if you do ever become part of these statistics, you will be covered and not stuck with a crushing out-of-pocket expense.

If you don’t know where to begin, we can help. At Berry Insurance we’ve helped all of our watercraft-riding clients get the insurance policies they need to feel at ease on the water.

And we want it to be smooth sailing for you as well -- so read on to learn everything you need to know about boating insurance, including the types, what it covers, if you need it, and what it might cost you. 

So, what is watercraft insurance?

Let’s start with the basics … what actually is it?

Watercraft insurance is a type of personal insurance policy providing coverage for various boats and watercraft including fishing boats, dinghy boats, deck boats, catamaran, sail boats, houseboats, pontoons, yachts, jet skis, and more.

In some cases, a homeowners insurance policy will cover a boat, but if it is of a certain size and value (which is often the case), homeowner’s insurance is probably not covering it in full.

Without adequate watercraft coverage, you could be stuck with a large out-of-pocket cost for damages to your boat, damages your boat causes, or injury liability.

Types of watercraft insurance:

There are several types of watercraft insurance available. Depending on your watercraft and needs, you may need a comprehensive policy with several of these coverages. Some of the types include:

• Hull insurance: covers damage to your boat 
• Third-party liability insurance: covers property damage your boat causes and damage caused from fuel spills, towing, medical expenses, and rescue operations.
• All-risk insurance: covers ice damage, freezing, pollution liability, reef damage liability, mechanical breakdown.
• Actual cash value insurance: covers the actual cash value of your boat or an agreed value predetermined when you buy your policy.
• Yacht insurance: covers boats 27’ or larger.

What does watercraft insurance cover (and not cover)?

We know you’re excited to put your watercraft to use, but wait! Before you hit the water, you’ll want to know what exactly watercraft insurance covers, and where there are limits, exclusions, and optional coverages. Depending on the type of insurance and coverages you select, this is what you can usually expect.

What is typically covered?

• Damage up to market value of boat: Damage to your or another boat will be covered up to the market value of the boat.
• Damage that occurs in waterways, rivers and lakes, and ocean waters within a certain number of miles from shore: As long as you aren’t too far from shore, accidents in various bodies of water are covered.
• Towing: If you can’t get your boat running, insurance will pay for it to be towed to shore, up to your policy limits.
• Wreckage removal: If boat wreckage needs to be removed from the water, insurance will pay for that up to your policy limits.
• Fuel spill indemnification: If you cause a fuel spill, your policy will pay for the damages and legal liability up to your policy limits.
• Injury liability: Your policy covers defense costs and settlements if you cause injury to others.
• Medical payments to others: Watercraft insurance will pay medical costs if you injure someone in an accident.

 What is not typically covered?

• Certain watercraft of a smaller size or value: Insurance companies each have their own limits, but often they won’t cover small, lower value watercraft.
• Boats in transit from home to water: Unfortunately, if your boat is outside of the water, it is not covered.
• Boats out during a time your policy indicates it’s in storage: Your insurance company will ask you to designate when your boat will be in use, and where it will be stored, so if it is damaged during a time you said it would be in storage, insurance won’t cover it.
• Damage that occurs in certain geographic areas: Watercraft insurance does not cover damages that occur a certain distance offshore. This distance varies carrier to carrier, so be sure to check with your insurance agent.
• Damage from negligence or lack of boat maintenance: Natural wear and tear is expected. You need to properly maintain your boat, because insurance won’t cover those types of damage.

Do I need watercraft insurance?

While watercraft insurance is not required for boats in Massachusetts, there are several reasons you may need it.

For one, if you finance your watercraft, your lender will most likely require it. Also, if you keep your boat in a marina, the marina may also require you to have it.

If you do not finance your boat and aren’t subject to marina rules, choosing whether or not to buy coverage is up to you, but we usually always recommend it because the protection is worth the cost.

While homeowners insurance may offer some protection to your watercraft, it likely does not cover the whole value. If you have an expensive boat, or if you would not be able to pay out-of-pocket if it were to be damaged, you should have boat insurance. Your homeowners insurance will also not cover situations such as fuel spills, which could cost thousands to clean up.

If your boat is inexpensive or has depreciated significantly and you are comfortable paying to repair or replace it, you might not need a policy for physical damage, but probably should still get one for the liability coverage so you won’t have to pay others if you cause an accident. 

How much watercraft insurance do I need?

Each coverage of your watercraft insurance policy will only pay out to certain limits (which you get to choose).Although these limits can vary depending on a person’s needs, we do have some general recommendations.

For the personal liability portion of your policy, we recommend at least $500,000 of coverage. If you have a personal umbrella liability insurance policy, you will likely even be required to have this amount. Boat accidents and potential subsequent lawsuits can be costly, so you’ll want to make sure you’re more than just partially covered.

The hull coverage, which covers damage to your boat should be at least the market value of your boat, but you may want to add more to also cover your trailer and motor.

The limits on other areas such as towing, wreckage removal and fuel spill indemnification are up to you based on how much coverage you want and how much risk you want to take, but it may make sense to talk to your insurance agent to help determine the best limits for your specific situation.

How much does watercraft insurance cost?

The cost of boat insurance can vary depending on type of boat, boat age, value, size, speed or horsepower, condition, location of operation, storing/docking location, operators of the watercraft, accidents/violations, coverage choices, and discount eligibility.

However, you can generally expect your annual premium to be about 1-2% of your boat’s market value.

Protect your boat and more on the water

We know you don’t want or expect anything to go wrong on your boat or watercraft. After all, boating is a hobby! It’s meant to be fun and relaxing. But accidents do happen, and the last thing you want is an unexpected situation to become an unmanageable expense.

If you have a boat or watercraft, you should have a substantial watercraft insurance policy to cover both damage and injuries.

An insurance agent (like us at Berry Insurance) can ensure calm waters with a watercraft insurance policy customized to your specific watercraft and needs.

And as we mentioned, a small portion of your boat could actually be covered by your homeowner’s insurance, so it may also be the right time to review all your personal insurance policies to make sure you’re covered in all areas, on and off the water.